A woman tends to horses as children sleep on fold-out beds in the main street of Lorne during major bush fires south of Melbourne, Dec 25, 2015. [Photo/Agencies]

Although an evacuation alert was lifted for the popular tourist town of Lorne and rain overnight had helped the firefighting operation, officials said the situation remained potentially dangerous with many hotspots. Images from the scene showed hillsides charred to the ground all the way down to the coast.

State Premier Daniel Andrews surveyed the area from the air and commended emergency services, noting that there had so far been no loss of life, but he warned that the number of homes destroyed could rise.

Meetings were held on Saturday for hundreds of victims urgently moved out of affected towns on Friday, many spending Christmas night in hurriedly organised shelters.

Andrews said financial grants had already been issued to help those who had lost their homes.

The fires started with a lightning strike on Dec 19 and, fanned by winds, have burned more than 2,000 hectares.

Walking tracks in the nearby Great Otway National Park have been closed to the public as some of the fires are within the park itself.

The disaster is the latest of a string of bushfires to hit Victoria and other states in recent weeks.

In 2009, Victoria witnessed Australia's worst ever bushfire disaster, since dubbed "Black Saturday".